October 2014/1

Q. How does the pricing process for cat bonds work?

The recent Mariah Re dispute serves as a reminder to participants in ILS transactions of the value of clear and transparent legal documents and disclosures to mitigate the litigation risks when claims materially exceed modelled losses.

Reinsurers and hedge funds increased their participation in the cat bond market over the 2013-2014 year as institutional investors pulled back, Aon Benfield Securities said in its annual review of the market.

Paul Mosquera is leaving AQR Re, where he was a senior underwriter in the Bermuda office, Trading Risk understands

The Mariah Re tornado bond lawsuit has resulted in legal changes designed to reinforce the independence of cat bond administrators.

Floridian insurer Homeowners Choice P&C Insurance Company (HCI) has been approved to take over its first batch of wind-only policies from state-backed insurer Citizens, in a move that could lead it to increase its reinsurance cover next year

Twelve Capital CEO Christoph Buerer says that opening a new London office will ensure the firm is "where the talent is" after it added several new analysts to the team

DCG Iris shareholders vote for wind-up; IBM's UK pension plan commits to Nephila; Nephila and Kinesis win at Insider Honours

The Royal Bank of Scotland (RBS) pension fund has reduced its allocations to the ILS sector over the past year as spreads have compressed

Reinsurers and hedge funds increased their participation in the cat bond market over the 2013-2014 year as institutional investors pulled back, Aon Benfield Securities said in its annual review of the market.

Returns generated by seven cat bond funds tracked by Trading Risk in the year to date are a third lower than the results recorded in the same period last year

Global insurer Ace is working on two initiatives that could significantly consolidate its reinsurance spending, sister publication The Insurance Insider has revealed.

Former Swiss Re team launch brokerage; AHJ launches capital markets unit; African agency's cat bond plans; Kramer's fund backs weather MGA

Sidecar investors may have access to vehicles from sponsors new to the market in 2015, sources said.

Reinsurer sidecars have accumulated average returns of 8.3 percent for the first seven months of 2014, according to the latest quarterly filings from mutual fund manager Stone Ridge.

Amid a very quiet third quarter for new ILS issuance, average premiums in the ILS and industry loss warranty (ILW) markets dropped by 9.5 percent, according to Lane Financial's rate-on-line index

A greater focus on parametric cat bonds could help make the ILS market more robust and avoid the problem of investors selling on risk, AIG's chief reinsurance officer Samir Shah suggested at the Trading Risk Monte Carlo roundtable.

Cat funds may start using full models that allow underwriters to probe further into exposure data, according to AIR Worldwide senior vice president Rob Newbold.

The volumes of US-linked industry loss warranties (ILWs) traded in the first half of 2014 came to about $800mn as suppliers broadened the terms of their cover, according to estimates from Aon's Global Re Specialty unit

Modelling agency RMS will not release its software platform RMS(one) until 2015, as the company reworks the new offering and reviews its proposed fee system.

The Swiss Re Cat Bond Price Return index gained 0.6 percent in September despite a slight downward blip after Hurricane Odile - which may trigger a $50mn payout from the MultiCat Mexico bond

The sponsor of the only nat cat bond to be distributed via the 144a securitisation market in the third quarter benefited from coming to market in the quietest Q3 for ILS issuance in 10 years

ILS investors were largely dissuaded from investing in the $500mn of pre-event Class 1 public securities issued for the Texas Windstorm Insurance Association (TWIA) last month due to the fact the bonds are taxable, Trading Risk understands

Validus subsidiary AlphaCat is preparing to launch a new cat bond fund that would pursue a passive tracker strategy, Trading Risk understands